HSN, Inc.: Weathering the Retail Storm, Instructor's notes.(Instructor's Note)

CASE DESCRIPTION This case was developed through the use of secondary research material. The case has a difficulty level of five and is appropriate to be analyzed and discussed by advanced undergraduate and graduate students in a strategic management or accounting class. The case allows the instructor the flexibility of concentrating on one strategic issue, or as a means of examining the entire strategic management process as well as complicated financial accounting reporting. The major focus within the strategic analysis as well as excellent stand alone modules is in the area of legal/political influence, economic, accounting, or the ability to survive in an unattractive industry. The instructor should allow approximately one class period for each element addressed. Using a cooperative learning method, student groups should require about two hours of outside research on each element researched. The case also provides opportunity for the instructor and the class to discuss in detail the disruptive effects of technological change and how the internet and online retailing is changing the retail landscape for good. CASE SYNOPSIS This case is a library, popular press and internet case which examines HSN (The Home Shopping Network). A company that built itself on what was considered a pervasive and dominant technology, yet is today experiencing first hand the disruptive challenges posed from the proliferation of the internet. Some introduction to online retailing and mail order, how it started, how it has become much of an oligopolistic industry and how as with other sectors and markets the internet is changing the face of home shopping is necessary. Likewise research into the other main competitors in the sector and how consolidation has occurred will also help to create an appropriate framework from which to analyze the environment. INTRODUCTION The information available in both the written case as well as outside research material provides a thorough platform for students to conduct a complete strategic analysis of HSN as well as discussion of various select elements of that model. Provided in these notes are the highlights of each element of the strategic management model. GENERAL ENVIRONMENT There are numerous issues that can be explored within the general environment. This level of the external environment will provide opportunities and threats that must be faced by all firms. In light of the fact that the issues arising from this level of the external environment are out of the control of individual firms, it is critical to position a firm to grasp emerging opportunities as well as avoid potential threats. Below are some pointers and or discussion points that may be used as a springboard into a full analysis of not only the attractiveness of the industry but also for its long-term viability. THREATS The internet: the internet is perhaps the single biggest threat for HSN and the other players in the TV Retail industry. As the characteristic of their particular demographic changes and the customer base are becoming more and more computer literate whilst more time starved. Potential customers are turning to the internet as a major alternative to TV retail as well as in many cases high street shopping. Related to the above threat, is that of internet providers moving into the TV shopping arena through what is described as user defined home shopping, an example of this is Talk Market, now partially owned by Amazon, ... customers can create their own personalized shopping channel and click on videos to make purchases. The poor economic environment, these shopping outlets seemed to have a lot of demand generated by, spur of the moment decisions. During this economic downturn it is going to become more and more difficult to convince people to purchase items, they may not really need. Being an on line retailer HSN is dependent on sales armchair buyers; however, this demographic is rapidly changing. …